Student loans are supposed to help middle-class kids pay for a college education, but these days they can do more harm than good. ABC News

According the ABC News report, the average college debt has grown from just a little over $9000 in 1993 to over $35,000 now.  And the government is financing it.  …and making money while they’re at it.  The federal government will earn some $50+ billion in profits from student loans this year alone.

While the government argues over whether the Stafford interest rates should remain the same, maybe they should be trying to figure out a way to offer financing that will cover their administrative costs plus a little bit, in turn making college more affordable for the middle class.

“Here’s the dirty little secret why colleges and universities charge so much: Because they can.”

The government is not the only player in this deal that is making things tough of college students; it’s the colleges and universities themselves.  The ABC News article had a great line: “Here’s the dirty little secret why colleges and universities charge so much: Because they can.” And that’s the truth.  If there was some sort of cap on what the government would lend for college it’s likely that after seeing that the average person wanting to attend college being unable to get a loan, the cost might come down.

I’m not sure what the solution is but it is obvious that something needs to be done or the middle class kid is not going to be able to attend college.

Better Pay that Student Loan — Once you are saddled with a student loan it’s like the relative that comes to visit and never leaves.  If you have financial problems, lose your job, or whatever, your student loans cannot be included in bankruptcy.

This used to be the case with only the government backed loans but due to heavy lobbying by lenders, now private lender held student loans are granted the same protection from bankruptcy.  The kicker with private student loans is that the interest rates are usually really high; 12-15 percent is not unusual.

Well, the good thing is that you can write off the interest you have paid on your student loans when tax time rolls around.  Well, not so fast.  You can take the deduction if you make under $75k a year but if you make more, forget about it.  That sounds OK though right?  Not really.

Let’s say you are smart or lucky, and went to one of those prestigious colleges.  Now you have $100k in loans (easy to do) and are once again fortunate to have landed a good job and make pretty decent money (that’s why you went to school in the first place right?) you still have a huge monthly student loan payment, that is hard to make because you have to spend your money on silly stuff like rent, electric, food, insurance and all the other stuff that goes along with being an adult. This rule really needs to be changed.

There is an option if you are having financial troubles and can’t afford to pay your student loan, it’s called Forbearance. This is a wolf in sheep’s clothing.  It’s pretty easy to get forbearance on your student loans.  Just go to the website, fill out a form, hit send and wait a couple of days.  In most cases you are granted forbearance. Awesome!  Not really.  The payment seems to go away (for a while) but you continue to rack up the interest, and it adds up quick and goes right on top of your principal.

Like I said before, something needs to change.  Perhaps being able to include student loans in bankruptcy with some sort of special provisions, I don’t know.  It is easy to get buried in debt when you have a student loan.

If you find yourself in a situation where your debt is starting to get out of control and you can’t make your student loan payments, then I think it’s time to seek the advice of a professional.

The professionals at DebtHelper.com can explain the benefits of a debt management program and provide you with a fresh start.

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